Experienced SEO and Premium Copywriter Forecasts the Recession: It Has Already Occurred

**Silicon Valley Bank’s Bankruptcy and Economic Recession Predictions**

Silicon Valley Bank (SVB) faced bankruptcy in March, leading to discussions about an impending economic recession. Dhaval Joshi, BCA Research’s chief strategist, predicted that this bankruptcy signified a more imminent recession than anticipated by many. However, as time passed, it seemed that Joshi’s prediction did not come to fruition. The U.S. economy continued to thrive, with decreasing inflation, low unemployment rates, and even an upward revision of first-quarter GDP growth. Nevertheless, Joshi argues that the focus should not be solely on a U.S. recession but rather on a global recession that has likely already begun.

**The Global Recession and Joshi’s Rationale**

Joshi contends that the global economy is currently in a recession based on the global GDP growth rate, which currently stands at 1.2% according to data from Oxford Economics nowcast. He believes that any growth rate below 2% qualifies as a global recession, even without an outright decline. His rationale is that the average global economic growth rate is around 2%, so anything below this number indicates below-average performance. Joshi points out that full-fledged global economic decline is rare and has only occurred during the Great Depression, the Great Recession, and the recent COVID-19 pandemic.

**Supporting Data and Concerns**

Several major economies around the world support Joshi’s thesis. France’s GDP growth for this year was 0.7%, while South Korea’s stood at 1.5%, according to data from the International Monetary Fund. The U.S., as the largest global economy leading the post-pandemic recovery, experienced a GDP growth rate of 5.4% compared to the end of 2019. However, this performance may be an outlier considering that advanced economies are growing at an overall rate of 1.3% this year.

Additionally, Joshi raises concern about rising unemployment rates worldwide. He highlights China’s 20% unemployment rate among young people aged 16 to 24 as evidence of a lack of economic opportunity globally. The European Union also faces this issue, with youth unemployment reaching 13.9% in May. In contrast, the U.S. stands as an outlier with an unemployment rate of 3.5% in this age group. Youth unemployment serves as an indicator of future social mobility and consumer spending, as higher workforce participation increases disposable income.

Furthermore, Joshi considers the J.P. Morgan global manufacturing Purchasing Managers’ Index (PMI) a vital metric to assess global economic strength. The PMI measures global manufacturing output, and recent data shows it fell to 48.8, the lowest level in six months, primarily driven by a decline in new order intakes worldwide. This pattern has persisted for 12 consecutive months, indicating weak demand for new goods globally.

**Other Indicators of a Troubled Global Economy**

Despite impressive stock market performance, particularly with the S&P 500’s six-month streak, other sectors of the global economy mirror the manufacturing industry’s concerning results. For example, Brent crude oil prices decreased from $100.94 in 2022 to $79.54 per barrel this year, according to the U.S. Energy Information Association. Chemical companies also lagged behind the S&P 500’s growth of 16% over the past six months, with Fidelity’s index fund that tracks chemical companies reporting a negative performance of -8.64%.

**The Role of Central Banks**

Joshi predicts that the problem will be exacerbated by the Federal Reserve and central banks across Europe as they tighten policies. While the Fed decided against an interest rate hike in June, meeting minutes released later revealed ongoing debates among officials about the possibility of future rate increases, aligning with Joshi’s viewpoint that additional actions could be on the horizon.

In conclusion, the bankruptcy of Silicon Valley Bank raised concerns about a potential economic recession. Although the U.S. economy has continued to perform well, there are indications of a global recession based on the global GDP growth rate, rising unemployment, weakening global manufacturing, and underperforming sectors. The actions of central banks could further exacerbate the situation. As such, Joshi’s predictions and analysis warrant attention and consideration in assessing the state of the global economy.

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